General Motors’ financing arm, GMAC, posted a $2.52 billion net loss in the third-quarter, mostly in its housing and auto units.
GM will lose $1.2 billion because it owns 49 percent of GMAC. Cerberus Capital Management LP owns 51 percent, a stake GM sold in 2006 for $7.4 billion in a move to raise cash and improve GMAC’s credit rating, reports the Detroit News.
Last year, GMAC’s third-quarter loss was only $1.6 billion.
GMAC blamed the loss on a slumping housing market and an auto industry pressured by weak consumer confidence, low used-vehicle prices and dealer credit performance.
"The economic and market conditions created an unrelenting environment for our business and the financial services sector overall," said GMAC Chief Executive Officer Alvaro G. de Molina in a written statement. "Clearly, this weighed heavily on financial results in the third quarter."
GMAC is attempting to become a bank holding company, which would help it access new capital from government regulators.
GMAC announced it was no longer giving auto loans in seven European countries. GMAC has also stopped financing vehicles to U.S. customers with credit scores less than 700, eliminating about 40 percent of potential customers.